Post on 27-Dec-2015
Chapter 6Product and service
concepts
Learning objectives
1 Define the term product
2 Classify consumer products
3 Discuss the importance of services to the economy
4 Identify the differences between services and goods
5 Explain why services marketing is important to manufacturers
Learning objectives (cont.)
6 Define the terms product item, product line and product mix
7 Describe marketing uses of branding
8 Describe marketing uses of packaging and labelling
9 Describe how and why product warranties are important marketing tools
Learning objective 1
Define the term marketingDefine the term product
Product
Everything, both favourable and
unfavourable, that a person
receives in an exchange.
1
What is a product?
Promotion
Place (distribution)
Price
1
Product is the heart
of the marketing
mix
Learning objective 2
Describe four marketing management philosophies.Classify consumer
products
Product classifications
Businessproduct
Consumer product
A product used to manufacture other goods or services, to facilitate an organisation’s operations or to
resell to other consumers.
Product bought to satisfy an individual’s personal wants.
2
Types of consumer products
Unsoughtproducts
Specialtyproducts
Shoppingproducts
Convenienceproducts
Consumerproducts
Businessproducts
Products
2
Types of consumer products (cont.)
Convenienceproduct
Shoppingproduct
Specialtyproduct
Unsoughtproduct
A relatively inexpensive item that merits little shopping effort.
A product that requires comparison shopping because it is usually more expensive and found in fewer stores.
A particular item for which consumers search extensively and are reluctant
to accept substitutes.
A product unknown to the potential buyer or a known product that the
buyer does not actively seek.
2
Learning objective 3
Describe four marketing management philosophies.
Discuss the importance of services to the economy
Service
The result of applying
human or mechanical
efforts to people or
objects.
3
The importance of services
8 out 10 workers are inservice sector
Services account for 74% of US GDP
Service occupations will be responsible for all job growth
through 2005
3
Learning objective 4
Identify the differences between services and goods
How services differ from goods
4
Characteristics that distinguish services:
• intangibility
• inseparability
• heterogeneity
• perishability.
Characteristics of services
Intangibility
Inseparability
Heterogeneity
Perishability
Services that cannot be touched, seen, tasted, heard or felt in the
same manner as goods.
A characteristic of services that allows them to be produced and
consumed simultaneously.
A characteristic of services that makes them less standardised and
uniform than goods.
A characteristics of services that prevents them from being stored,
warehoused or inventoried.
4
Learning objective 5
Explain why services
marketing is important
to manufacturers
Services marketing in manufacturing
Strong competitive advantages
5
Learning objective 6
Define the terms
product item, product
line and product mix
Product items, lines and mixes
Product item
Product line
Product mix
A specific version of a product that can be designated as a distinct offering among an organisation’s products.
A group of closely related product items.
All products that an organisation sells.
6
Benefits of product lines6
Why form product lines?
• Advertising economies
• Package uniformity
• Standardised components
• Efficient sales and distribution
• Equivalent quality
Product mix width
• diversifies risk
• capitalises on established reputations.
The number of product lines an organisation offers:
6
Product line depth
• attracts buyers with different preferences
• increases sales/profits by further market segmentation
• capitalises on economies of scale
• evens out seasonal sales patterns.
The number of product items in a product line:
6
Adjustments
Product modification
Productrepositioning
Product lineextension or contraction
Adjustments to product items,lines and mixes
6
Product modifications6
• Quality modification
• Functional modification
• Style modification
Planned obsolescence
The practice of modifying
products so those that
have already been sold
become obsolete before
they actually need
replacement.
6
Repositioning6
Why reposition established brands?
• Changing demographics
• Declining sales
• Changes in social environment
Product line extension
Adding additional products
to an existing product line
in order to compete more
broadly in the industry.
6
Product line contraction
• some products have low sales or cannibalise sales of other items
• resources are disproportionately allocated to slow-moving products
• items have become obsolete because of new product entries.
Symptoms of product line over-extension:
6
Learning objective 7
Describe marketing uses of branding
Brand
A name, term, symbol, design or combination thereof that identifies a seller’s products and differentiates them from competitors’ products.
7
Branding
Brand name
Brandmark
Brand equity
Masterbrand
That part of a brand that can be spoken, including letters, words and numbers.
The elements of a brand that cannot be spoken.
The value of company and brand names.
A brand so dominant that it comes to mind immediately when a product category,
use, attribute or benefit is mentioned.
7
Benefits of branding
Product identification
Repeat sales
New product sales
Branding distinguishes products from competition
7
An effective brand name …
• is easy to pronounce
• is easy to recognise and remember
• is short, distinctive and unique
• describes the product, use and benefits
• has a positive connotation
• reinforces the product image
• is legally protectable.
7
Master brands
Photography
Adhesive bandages
Rum
Vacuum cleaners
Biscuits
Cream cheese
Crayons
Petroleum jelly
Kodak
Band-Aid
Bundaberg
Hoover
Arnott’s
Philadelphia
Crayola
Vaseline
7
Branding strategies7
Brand No brand
Manufacturer’s brand Private brand
Individualbrand
Family brand
Individualbrand
Combi-nation
Family brand
Combi-nation
Generic brand
A no-frills, no-brand-name,
low-cost product that is
simply identified by its
product category.
7
Manufacturers’ brands versusprivate brands
Manufacturers’ brand
Private brand
The brand name of a manufacturer.
A brand name owned by a wholesaler or a
retailer.
7
Advantages of manufacturers’ brands
7
• Develop customer loyalty
• Attract new customers
• Enhance prestige
• Offer rapid delivery so can carry less inventory
• Ensure dealer loyalty
Advantages of private brands7
• Earn higher profits
• Less pressure to mark down prices
• Manufacturer may drop a brand or become a direct competitor to dealers
• Ties to wholesaler or retailer
• No control over distribution of manufacturers’ brands
Individual brands versusfamily brands
Individual brand
Family brand
Using different brand names for different products.
Marketing several different products under the same
brand name.
7
Co-branding
Ingredientbranding
Cooperative branding
Complementary branding
Types of co-branding
7
Trademarks
• Many parts of a brand and associated symbols qualify for trademark protection.
• The mark has to be continuously protected.
• Rights continue for as long as it is used.
A trademark is the exclusive right A trademark is the exclusive right to use a brand.to use a brand.
7
Describe marketing
uses of packaging and
labelling
Learning objective 8
Packaging8
Functions of packaging:
• contain and protect
• promote
• facilitate storage, use
and convenience
• facilitate recycling.
Labelling
Persuasive
• Focuses on promotional theme
• Information is secondary
Informational
• Helps make proper selections
• Lowers cognitive dissonance
• Includes use/care
8
Universal product codes
A series of thick and thin
vertical lines (bar codes),
readable by computerised
optical scanners, that
represent numbers used to
track products.
8
Describe how and why
product warranties are
important marketing tools
Learning objective 9
Product warranties
Warranty
Expresswarranty
Implied warranty
A confirmation of the quality or performance of a good or service.
A written guarantee.
An unwritten guarantee that the good or service is fit for the purpose for which it was sold (UCC).
9
Product warranties (cont.)
Written guarantee
Implied warranty
Express warranty
Unwritten guarantee
9